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Minera Andes Announces the San Jose Mine Increases Silver and Gold Mineral Reserves By 100 Percent

Posted on: Monday, 26 November 2007, 18:00 CST

SPOKANE, WA, Nov. 26 /PRNewswire-FirstCall/ -- Minera Andes Inc. (TSX: MAI and US OTC: MNEAF) is pleased to announce results of a NI 43-101 Technical Report to be filed that includes new mineral resources identified from 2007 exploration drilling, underground development and conversion of 2006 mineral resources into mineral reserves at the San Jose project in Santa Cruz province, southern Argentina. In addition the report also quantifies areas of mineral potential based on drilling. The San Jose mining operation is expected to reach full production of 750 tonnes per day (t/d) by year-end and the process plant in commissioning is forecast by Minera Andes to reach full capacity in first half of 2008. The San Jose project is operated by Minera Santa Cruz S.A. ("MSC") (owned 51% by Hochschild Mining plc ("Hochschild") (HOC.L Reuters, HOC.LN Bloomberg, London Stock Exchange) and 49% by Minera Andes).

Some highlights of the new Technical Report by AMEC Americas Limited (AMEC) are as follows (all amounts are expressed in U.S. dollars, unless otherwise indicated):

- Proven and Probable Mineral Reserves: at June 30, 2007 are: 2.4 million tonnes grading 6.79 g/t gold and 430 g/t silver. The economic cutoff used to calculate the reserves is $94/t (using a price of $500 for gold and $9.00 for silver and taking into account metallurgical recoveries). - Gold contained: 521,000 ounces of Proven and Probable Mineral Reserves - Silver contained: 38 million ounces of Proven and Probable Mineral Reserves - Production: 750 t/day at full production mining rate - Forecast average operating costs of: $3.92 per ounce silver equivalent - Mine life increased from 5.2 yrs to 9 yrs - Forecast average gold production: 64,000 ounces per year at full production - Forecast average silver production: 3.9 million ounces per year at full production - Mineral potential was estimated for three targets to total: 1.6-3.4 million tonnes, with 6-10 g/t gold and 200-600 g/t silver

The new Technical Report by AMEC entitled "San Jose Property San Cruz Province, Argentina NI 43-101 Technical Report", was authored by Pierre Rocque (P. Eng.), William Colquhoun (FSAIMM), Emmanuel Henry MAusIMM (C.P.), and Armando Simon, R.P. Geol., AIG, appropriately qualified persons according to NI 43-101. The results from the new report indicate that the 2006 core drilling program (128 holes totaling 22,047 meters) and 2007 development and drilling on the Kospi and Frea veins at San Jose increased silver and gold reserves by 100% (on a tonnage basis) from the level announced in the our September 2007 Technical Report. Work at San Jose in 2007 has increased the mineral resources and mineral reserves from a 38,000-meter exploration drilling campaign currently underway, and development of the underground workings. We expect further increases in the mineral reserves and mineral resources from these programs. At the current mining production rate of 750 t/d the new mineral reserves that include the Kospi vein indicate a mine life of 9 years at San Jose, an increase of 73 percent over the existing mine life of 5.2 years.

Allen Ambrose, president of Minera Andes, said "Even with the new drilling, less than 15% of the known 40 kilometers of the vein trends at San Jose have been drilled. The drilling in 2006-2007 has increased the mine's mineral reserves by 100% (on a tonnage basis). The joint venture is drilling 38,000 meters in the current exploration program to define new mineral reserves and continue evaluating new targets. With commissioning of the mine and the ramping up of production it is an exciting time for Minera Andes. Now we are developing the mineral reserves to support the plans of MSC to double production to 1,500 t/d. The mineral potential estimates on drilled targets further highlights the potential to increase the mineral reserves."

Mineral Potential

The new Technical Report also estimates the mineral potential at San Jose based on drilling outside the existing mineral reserves/resources. Mineral potential was estimated using long section based blocks with 2 to 8 drill holes per target for the Odin, Aylen, and Frea extension targets. The mineral potential for these targets based on the current drilling is estimated to total 1.6 to 3.4 million tonnes ranging from 6 to 10 g/t gold and 200 to 600 g/t silver.

The estimation used a conventional method, based on the interpretation of mineralized blocks on vertical longitudinal sections, the calculation of block areas, average horizontal widths and weighted average grades of the mineralized intersections, and the subsequent calculation of block tonnages and weighted average grades.

AMEC's estimation has also considered the following procedures and assumptions:

- For Ayelen and Odin, AMEC used the composite vein true thicknesses and grades provided by Minera Andes. Composite grades were capped at 10 g/t Au and 500 g/t Ag. - For Frea, AMEC used the individual sample lengths and assays. Individual assays were capped at 25 g/t Au and 1,000 g/t Ag. In such cases where splits were present in the proximity of the main vein (less than 10 m along the hole), the estimation considered the combined thickness and weighted average grade of the split and the vein. Splits located at greater distances were not included in the estimation. - For the estimation of horizontal thicknesses, AMEC assumed that all veins dip 70 degrees, and that all holes were drilled with 50 degrees dip. - Whenever necessary, horizontal thicknesses were diluted to 1 m minimum mining width. - AMEC considered a 2.65 t/m(3) bulk density.

It should be emphasized that this estimation is conceptual in nature, that there has been insufficient exploration to define a mineral resource, and that it is uncertain if further exploration will result in the target being delineated as a mineral resource.

Potential Tonnages and Grades of Selected Exploration Targets ------------------------------------------------------------------------- Tonnage (Million tonnes) Gold (g/t) Silver (g/t) Vein target --------------------------------------------------------- Minimum Maximum (Min) (Max) Min Max Min Max ------------------------------------------------------------------------- Ayelen 0.2 0.4 7 11 300 700 ------------------------------------------------------------------------- Odin 1.0 2.0 6 10 200 600 ------------------------------------------------------------------------- Frea Extensions 0.4 1.0 6 10 200 600 ------------------------------------------------------------------------- Total 1.6 3.4 6 10 200 600 ------------------------------------------------------------------------- San Jose Mine

The drilling completed on the San Jose mine at year end 2006 to June 30th, 2007 indicate an increase of 88% in contained silver equivalent and the mine now contains over 64 million silver equivalent ounces in the Proven and Probable Mineral Reserve categories (see reserves tables below). This increase in mineral reserves is primarily due to the addition of the Kospi vein and new development and drilling on trend of the Frea vein. Estimated mine life is 9.0 years with the current reserves at a 750 t/d mining rate.

The Kospi vein, discovered in 2005, is the first target that has been converted to a mineral reserve out of several high-priority drill targets identified on the property through early reconnaissance drilling and surface exploration programs. Other priority targets are Odin (A and B), Ayelen, Flor, Huevos Verdes West, Kospi 1, Kospi South, Lourdes, Frigga, Aguas Vivas, Roadside, and Portuguese West. Though these targets are early stage we believe that they have significant discovery potential for gold and silver mineralization. Drilling is planned for these targets as part of an ongoing 38,000 meter, $4 million exploration drilling program started earlier this year. Currently over 10,000 meters have been drilled for this field seasons 2007-2008 program.

The technical report by AMEC, uses a long-term gold price of $575 per ounce (oz) and $9.00 per oz for silver for estimating mineral reserves in its economic analysis. The average cash operating costs are estimated at $94/tonne of ore processed, or $235/ounce gold equivalent. AMEC estimates the San Jose a remaining capital expense from the initial capital cost budget to the amount of approximately $20.8 million. The base case Net Present Value (NPV), using an 8% discount rate, is $91 million. Based on the parameters listed above, the undiscounted NPV representing cumulative cash flow is $150 million.

The San Jose mine is ramping up from the start up in the third quarter of 2007 to full commercial production. Approximately eleven kilometers of underground workings have been developed at the mine along with the associated infrastructure. Power is supplied by four diesel generators. The mine is designed to produce 750 t/d of ore from three separate structures, the Frea, Huevos Verdes, and Kospi veins, using underground mining methods. Mechanized cut and fill mining will be used as the primary mining method supplemented with conventional cut and fill mining.

The processing facility utilizes a Gekko Gravity-Flotation-Intensive Leaching (GFIL) process, direct electrowinning and resin column absorption for the production of the final product a gold-silver dore. Due to the potential for additional risk with a newer process technology that might result in lower throughput and metallurgical recoveries AMEC has reduced expected recovery of gold to 75% and silver to 65% in the first year of production. They have assumed the average life of mine recovery of 90% for gold and 88% for silver in the second year. As a result there is some risk that additional plant modifications and commissioning time could be required to achieve these increased recoveries and that there would be additional capital costs.

Mineral Resources, Reserves

The new San Jose mineral resource and mineral reserve estimates, mine life, and mining rates, disclosed herein are based on work from our joint venture partner that was audited and adjusted by independent qualified persons Emmanuel Henry, MAusIMM (CP), and Pierre Rocque, P. Eng. at AMEC. The mineral resources and reserves remain open along strike and at depth in some areas.

At June 30, 2007 total Measured and Indicated Mineral Resources at the San Jose Project were 602,000 ounces of gold and 38.0 million ounces of silver, contained in 2.4 million tonnes grading 7.91 g/t gold and 500 g/t silver or 74 million ounces of silver on a silver equivalent basis (see table below). An additional 58,000 ounces of gold and 3.3 million ounces of silver, in 230,000 tonnes, grading 7.80 g/t gold and 452 g/t silver are classified as Inferred Resources. The economic cutoff used to estimate the mineral resources is $45/t (using a price of $500 per ounce for gold and $9.00 per ounce for silver). Gold mill recovery used for the mineral resource estimate is 89.65% and silver mill recovery is 90.49%. Gold commercial recovery used for the mineral resource estimate is 99.68% and 99.75%

Mineral Resources(x) - Measured and Indicated ------------------------------------------------------------------------- Grades Classified Resource ------------------------------------------------------------------------- Area Total Resources Au Ag Resource Measured Indicated (6/30/07) (g/t) (g/t) (t) (t) (t) ------------------------------------------------------------------------- Huevos Verdes South 7.04 520 615,000 290,000 325,000 ------------------------------------------------------------------------- Frea 8.72 384 950,000 354,000 596,000 ------------------------------------------------------------------------- Kospi 7.63 622 800,000 0 800,000 ------------------------------------------------------------------------- Total Project Oct. 21, 2005 9.32 494 1,097,000 167,000 930,000 ------------------------------------------------------------------------- Total Project Dec 31, 2006 8.33 522 1,779,000 291,000 1,488,000 ------------------------------------------------------------------------- Total Project 06/30/07 7.91 500 2,365,000 645,000 1,721,000 ------------------------------------------------------------------------- Percentage change +33 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Contained Ounces ------------------------------------------------------------------------- Area Silver Resources Gold Silver equivalent (6/30/07) (oz) (oz) (oz) ------------------------------------------------------------------------- Huevos Verdes South 139,000 10,296,000 18,636,000 ------------------------------------------------------------------------- Frea 266,000 11,745,000 27,705,000 ------------------------------------------------------------------------- Kospi 196,000 15,991,000 27,751,000 ------------------------------------------------------------------------- Total Project Oct. 21, 2005 327,000 17,343,000 36,972,000 ------------------------------------------------------------------------- Total Project Dec 31, 2006 477,000 29,847,000 58,467,000 ------------------------------------------------------------------------- Total Project 06/30/07 602,000 38,032,000 74,092,000 ------------------------------------------------------------------------- Percentage change +26 +27 +27 ------------------------------------------------------------------------- (x)Note: Contains 100 percent of the resources, Minera Andes ownership of the project is 49%. Mineral Resources are inclusive of mineral reserves. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Silver/gold equivalency 1oz gold = 60 oz silver.

The resource models were developed using industry-accepted methods. AMEC validated the model estimates, and after some adjustments, found them to reasonably estimate grade and tonnage. The mineral resource estimates are compliant with CIM Definition Standards for Mineral Resources and Mineral Reserves as incorporated by reference in NI 43-101. AMEC notes, however, that the resource classification criteria applied are generous and are at the limit of what AMEC would qualify as reasonable. AMEC also notes biases of 18% and 21% for gold and silver, respectively, at Huevos Verdes South. Even larger biases are observed at Huevos Verdes Ramal. This may not have a material impact at the scale of the property, but it will have a significant local impact.

At June 30th, 2007 the Proven and Probable Mineral Reserves, based on an overall economic cutoff off of $94/t (using a price of $500/oz for gold and $9.00/oz for silver), are 2.4 million tonnes at 6.79 g/t gold and 430 g/t silver, containing 521,000 ounces of gold and 33,017,000 ounces of silver. The mineral reserves also take into account marginal blocks of ore located on the periphery of higher grade zones. The marginal cutoff for these blocks was $45/t. The marginal cutoff was defined by the value of ore that meets the variable costs, but not the fixed costs. A 15% unplanned dilution and a 5% mining loss were used in the calculation for the October 21, 2005 mineral reserves and a 12% unplanned dilution and 5% mining loss has been used in the April 30th, 2007 and June 30th, 2007 mineral reserve estimations.

Mineral Reserves(x) - Proven and Probable ------------------------------------------------------------------------- Grades Classified Reserve ------------------------------------------------------------------------- Area Total Reserves Au Ag Reserve Proven Probable (6/30/07) (g/t) (g/t) (t) (t) (t) ------------------------------------------------------------------------- Huevos Verdes 5.62 417 595,000 307,000 288,000 ------------------------------------------------------------------------- Frea 7.77 343 937,000 350,000 587,000 ------------------------------------------------------------------------- Kospi 6.52 536 854,000 - 854,000 ------------------------------------------------------------------------- Total Project Oct. 21, 2005 7.7 406 1,160,859 174,241 986,626 ------------------------------------------------------------------------- Total Project 4/30/07 7.89 417 1,195,000 311,000 884,000 ------------------------------------------------------------------------- Total Project 6/30/07 6.79 430 2,386,000 657,000 1,729,000 ------------------------------------------------------------------------- Percentage Change +100 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Contained Ounces ------------------------------------------------------------------------- Area Silver Reserves Gold Silver Equivalent (6/30/07) (oz) (oz) (oz) ------------------------------------------------------------------------- Huevos Verdes 108,000 7,974,000 14,454,000 ------------------------------------------------------------------------- Frea 234,000 10,321,000 24,361,000 ------------------------------------------------------------------------- Kospi 179,000 14,722,000 25,462,000 ------------------------------------------------------------------------- Total Project Oct. 21, 2005 288,000 15,229,000 32,515,000 ------------------------------------------------------------------------- Total Project 4/30/07 303,000 16,028,000 34,224,000 ------------------------------------------------------------------------- Total Project 6/30/07 521,000 33,017,000 64,277,000 ------------------------------------------------------------------------- Percentage Change +72 +106 +88 ------------------------------------------------------------------------- (x)Note: Contains 100 percent of the reserves, Minera Andes ownership of the project is 49%. Silver/gold equivalency 1oz Au = 60 oz Ag.

The mineral resource and mineral reserve estimates are based on 472 drill holes and trenches holes (76,478 meters) and 2,733 channel samples taken from underground workings constructed at Huevos Verdes, Frea, and Kospi. The nominal spacing at Huevos Verdes and Frea is approximately 35 meters along strike (horizontally) and 50 meters vertically and at Kospi it is approximately 40 meters by 40 meters.

The following summarizes the key assumptions, parameters and methods used in the mineral resource and mineral reserve estimates:

- Gold assays were cut to 65 g/t, 10 g/t, 50 g/t, 50 g/t and 50 g/t and 30 g/t at Huevos Verdes South, Central, North, Ramal, Frea and at Kospi respectively. Silver assays were cut to 6,000 g/t, 500 g/t, 4,000 g/t, 5,000 g/t, 3,000 g/t and 2,700 g/t at Huevos Verdes South, Central, North, Ramal, Frea, and at Kospi, respectively. - Density values used for the estimate are 2,595 t/m(3) for Huevos Verdes, 2.611 t/m(3) for Frea, and Kospi. - The geological model was developed using a series of northeast oriented sections spaced approximately 5 meters to 50 meters apart. - Assays were composited to full vein-width interval. - The estimation was done using Ordinary Kriging coupled with oriented search ellipses. - Block grades were estimated based on interpretation of geological parameters logged in drill holes. - Included in the mineral resource estimate at Huevos Verdes and Frea are 2,733 chip channel samples taken from the underground workings.

Minera Andes is a gold, silver and copper exploration company working in Argentina. The Corporation holds about 410,000 acres of mineral exploration land in Argentina including the co-owned San Jose silver/gold mine that has started initial production. Minera Andes is also exploring the Los Azules copper project in San Juan province, where an exploration program is underway to define a resource. Other exploration properties, primarily silver and gold, are being evaluated in southern Argentina. The Corporation presently has 166,832,517 shares issued and outstanding.

Allen V. Ambrose, Minera Andes' President, who is an appropriately "qualified person" as defined by National Instrument 43-101, has supervised the preparation of the information in the news release.

This news is submitted by Allen V. Ambrose, President and Director of Minera Andes Inc.

Caution Concerning Forward-Looking Statements:

This press release contains certain "forward-looking statements", including, but not limited to, the statements regarding the Company's strategic plans, evolution of mineral resources and reserves, work programs, development plans and exploration budgets at the Company's San Jose Project. Investors should be aware that the introduction of new technology such as ILR can create added risk in achieving metallurgical performance. The forward-looking statements express, as at the date of this press release, the Company's plans, estimates, forecasts, projections, expectations or beliefs as to future events and results. Forward-looking statements involve a number of risks and uncertainties, and there can be no assurance that such statements will prove to be accurate. Therefore, actual results and future events could differ materially from those anticipated in such statements. In particular, there can be no assurance that commercial production at the San Jose mine will be achieved on a timely basis, or at all, that production capacity at the San Jose mine will be successfully increased, that resources and reserves at the San Jose mine will be increased or that Minera Andes will successfully raise the funds necessary to maintain its interest in the San Jose mine. Risks and uncertainties that could cause results or future events to differ materially from current expectations expressed or implied by the forward-looking statements include, but are not limited to, factors associated with fluctuations in the market price of precious metals, mining industry risks, risks associated with foreign operations, the state of the capital markets, environmental risks and hazards, uncertainty as to calculation of mineral reserves and other risks. Reference is made to the risk factors and uncertainties described in the Company's continuous disclosure record, a copy of which is available under the Company's profile at http://www.sedar.com/. In addition, Minera Andes' joint venture partner, a subsidiary of Hochschild Mining plc, and its affiliates do not accept responsibility for the use of project data or the adequacy or accuracy of this release. Similarly, Hochschild denies any responsibility for Minera Andes's NI 43-101 Technical Report or for any of Minera Andes's Canadian securities filings or for any information that Minera Andes has given to the securities markets and any such responsibility is hereby disclaimed in all respects.

Cautionary Note to U.S. Investors:

The United States Securities and Exchange Commission (the "SEC") permits mining companies, in their filings with the SEC, to disclose only those mineral deposits with "mineral reserves" that a company can economically and legally extract or produce. We use certain terms in this press release, such as "mineral resources", that the SEC guidelines strictly prohibit us from including in our filings with the SEC.

CONTACT: Art Johnson at the Spokane office, or Krister A. Kottmeier, investor relations - Canada, at the Vancouver office. Visit our Web site: http://www.minandes.com/. Spokane Office: 111 East Magnesium Road, Ste. A, Spokane, WA, 99208, USA, Phone: (509) 921-7322, E-mail: info@minandes.com; Vancouver Office: 911-470 Granville Street, Vancouver, B.C., V6C 1V5, Phone: (604) 689-7017, (877) 689-7018, E-mail: ircanada@minandes.com

Minera Andes Inc.

CONTACT: Art Johnson at the Spokane office, or Krister A. Kottmeier,investor relations - Canada, at the Vancouver office. Visit our Web site:http://www.minandes.com/. Spokane Office: 111 East Magnesium Road, Ste. A, Spokane,WA, 99208, USA, Phone: (509) 921-7322, E-mail: info@minandes.com; VancouverOffice: 911-470 Granville Street, Vancouver, B.C., V6C 1V5, Phone: (604)689-7017, (877) 689-7018, E-mail: ircanada@minandes.com

Source: PRNewswire-FirstCall

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